On Becoming NRI: What to do when you leave India to settle abroad

Every year, there are hundreds of Indians are planned to emigrate. There are several reasons involved in this emigration that includes lucrative jobs, higher education in reputed university and also for a better lifestyle. When compared to young bachelors, recent wedding couples are highly preferred to go abroad with their spouses. When it comes to reality and achieve lifetime goals, many people can travel in their own path to reach the orbit of success. In such a case, they plan to leave India and wish to stay in some other country.

Even some people want to pursue their higher career goals in abroad and also need to take care of their home, parents and children. Due to its higher responsibility, a few people can try to take the whole family move to abroad and plan to become the NRIs. Once they reach the destinations and set well in the places, they can begin to start the sense of duty and concentrate to achieve their lifetime goals. They also spend their pleasure life along with his family and children.

Over the past few years, some people are willing to go abroad for learning new concepts and make an individual career. Many Indians settled abroad for a bright future and make their career opportunities with outstanding facilities to explore their talents and earning a lot in dollars, BHD, or Euro. When you decide to move foreign countries, there are some financial issues that you could face before you become a NRI. The major reasons behind this are growing of Indian skills or talent and being recognized in the worldwide.

But still many of them do not have enough knowledge and understanding of several things to grab instant attention before they leave our country and become a NRI. Some of the tasks are really very daunting to face when you move abroad as NRI. But if you understand, you could have been done very easily before becoming a NRI. Before leaving India, you should consider the following important things in your mind that includes:

How do you engagement in activity application of loan that you might have taken?
What are the duty implications of the move foreign?
Would you assist on to your stocks and mutual finance investments?
What do you accomplish the loan association of accounts that are functional at home?
Do you wish to have the life and health protection guaranteed by government covers that you buy?

A brief introduction about NRI

When you plan to move abroad for a prolong time for various reasons such as career opportunity, you should evolve into NRI. The term NRI stands for Non-Resident Indian, which is an individual who out of India from the Indian Citizen. If the person is considered as RI, i.e. Resident Indian, he/she should meet the following criteria such as,

The person should present in India for minimum 182 days or more during the economic year

(Or)

The person should present in India for 365 or 366 days or more in the past four economic years.

If any of the individual should be considered as NRIs, they are worthy to lend in India. Every NRI needs a valid bank account and essential important documents to start spending in India. Aside the real estate field, an NRI can find the stocks and mutual funds. If the shareholder picks it complex to serve the Indian account, they can determine an individual who ready to take the complete work over the potential of lawyer. There are several different types of processes available for both NRIs and residents in the financial sectors. If you want to become an NRI, you must provide in any of these sectors such as mutual funds, banks and life insurance policies and then you able to execute anything that you want.

If the person is originated in India and holds another country’s citizenship particularized by the Central Government, he/she is considered as a PIO, i.e. Person of Indian Origin. They hold a foreign passport and esteem of ability in financial and educational fields. However, this PIO is also identical of the NRI.

Different class of bank accounts for an NRI can hold

By rule, the NRIs are not granted to influence the stable S & I accounts in the Indian bank. They have the possibility to do couple of things such as either,

Close the current account

(Or)

Convert the existence account from Indian resident to an NRI account

Basically, the Non-Resident Indian has three choices of savings account to select from that are discussed briefly in the given table below,

S.No	Non-resident ordinary account(NRO)	Non-resident external rupee account(NRE)
1	Convert your account into NRO	Open a new NRE savings account
2	NRIs allow to deposit Indian income into NRO account	NRE allows to deposit only foreign funds
3	Able to make payments like EMI and other payments from NRO	Freely transferred to your Indian account to Foreign account and vice versa
4	Money in NRO account couldn’t be taken	Money in NRE account is rupee and able to send back to the residence country
5	Needs to pay tax in NRO	Interest acquire in NRE is tax free
6	Interest will be taxable that is around 3%	Interest is tax free and earn an interest of around 3%

In addition to, the third form of NRI saving account is FCNR, i.e. Foreign Currency Non-Resident Account. It is quite equivalent to the NRE account although the earnings are in foreign currency.

For the NRIs convenience, they are recommended to maintain two individual accounts such as NRO and NRE. Here are brief sketches of various class of bank accounts can be used by NRI,

What to lend in	Shop and sell shares	Spend in IPOs and mutual funds	Trading in futures and options
How to spend	Lending with PIS	Lending with NRI account	Lending with NRO account
Kind of bank	NRE or NRO PIS	NRE or NRO saving account	NRO saving account

Step by step methods to convert saving bank account into NRO account

First, visit your nearby bank and fill up the application forms.
Essential requirements are submitting two passport size photographs, a copy of your Visa and a copy of your passport.
If you already moved to foreign countries without completing this form, you could get copies of all these documents that are attested by the Indian Embassy and then send them to the entire specific branch. If you anticipate earning incomes in India, you should do and complete this formality.

How to create joint bank accounts for an NRI?

When you create joint bank accounts, there are two possibilities available for NRIs:

Once can create account jointly with spouse or any other resident Indian

If your spouse is your second or joint holder, you can convert this account into an NRO account by informing to the bank.

Another option is create account with spouse or any other resident who is a first holder and for you as a joint holder

If your spouse or any of the Indian Resident is a first holder of your account and you become a joint holder, then you need to update your status as NRI.

Does the NRI can have the possibility to make fixed deposits?

In fact, the NRIs cannot uphold a civilian fixed deposit. If any of your NRI family members become a joint holder in a fixed deposit, it needs to tell the bank about their status. Once you inform the bank, they will allow you to uphold your deposit till the maturity period or you may close the deposit and open a new one. If any NRI is opening a new deposit account it can be considered as a NRO deposit and the RI can be a second holder.

Normally, most of the banks can convert your FD to NRO deposits automatically, once you have changed the bank status. But some banks need to do the individual account and also verify with your banker to change the FD to NRO. For this, the interest will be taxable up to 30.9%.

Home mortgage for NRI

For an NRI, one should wants to continue the payment of home mortgage and they needs to move the auto payment mode for making the instalments on a monthly basis. It is required to handover the new post dated cheques. To pay your EMI through your NRO account, you must register via the net banking to receive e-alerts as well as loan information. In case, you are a guarantor for any of loan accounts, you make sure that the repayments are made properly on a regular basis.

Insurance on proper NRI

Once you became an NRI, it is quite daunting task to buy insurance in our country. In case, if you are temporarily moved to abroad and come back to your country in some period, you need to examine the right insurance coverage and decide to buy the best policies before you become an NRI. Before buying the insurance policies, it is very important to verify the geographical coverage as well as read the terms and conditions thoroughly. You can also apply for life and personal injury insurance policy to cover death globally. In case of mediclaim, it is possible to take the treatment in India. If you are an existed insurance holder, you just inform to update the new address and ask them to continue your service, if any.

NRIs health insurance

Usually, the health insurance claims are not possible for hospitalization in abroad. The only option is that you should discontinue the plan and then open it again once you come back. Normally, the different countries have the different set of health and medical care regulations and most of the times it is the best to handover the current policy when you move to abroad. When you are shifting to abroad, you can buy a new health plan in that country.

Life insurance policies meet NRI

Once you have purchased the life insurance coverage in your country, it will definitely cover your death anywhere in the world. If you plan to move abroad, you can have the two possibilities either you will discontinue the existing plan or buy a new one in the new country that you settle of residence. Commonly, the life insurance term plans are less expensive in most of the countries like Dubai, Europe, and Singapore. However, the premium for all the term plans are 20% cheaper than India, so you can easily buy a new plan. Before closing the existing plan, first you need to open a new plan and get activated. After that, you request to discontinue the life insurance cover in RI. If you pleasure to continue all the insurance services, it is necessary to tell your insurer about your latest status.

NRIs LIC policy

After you switch-over to the foreign countries, you are considered as NRI. If you have any current LIC policy in India, you can easily verify the entire details at the specific NRI Centre at LIC Website.

First of all, you should update your recent status to the servicing branch of LIC and tell about your NRI as well as new address.
You should also fill up and submit the NRI questionnaire form with your signature.
If you wish to continue to pay premiums via any of these channels like Online, Net Banking, LIC and ECS, you should tell about your interest to them.

Important rules to be followed for both death and maturity proceeds

Before you become an NRI, if you have taken any policy and it will not affect your status of the policy or proceeds.
If you wish to continue pay the premiums, you just paid in foreign currency.
If you paid the premiums fully in Indian rupees through the NRO account, it will be not applicable for death or maturity proceeds.

Regarding Demat account on proper NRI

When it comes to investing in India, the NRIs have some restrictions. Actually, the RBI has a detailed description of dos and don’ts for Non-Resident Indians in order to make lending in the Indian companies. There are only a few certain possibilities available for NRI customers to spend such as trade, stock markets, share and any secondary market via the specialized account known as PIS, i.e. Portfolio Investment Services. Below are some conditions to be followed by NRI who invest in Indian companies:

In Indian equities, the PIS are only applicable for trading and not for the mutual funds.
The NRI should have only one PIS account.
Primarily, there are two types of Demat accounts available for NRIs such as,

Repatriable Demat Account

This account is mainly used to uphold the securities while purchasing with the funds that are repatriable.

Non-Repatriable Demat Account

This is also used for uphold the securities using funds but are non-repatriable. Usually, the sale proceed of these securities are credited to the NRO bank account.

Under the rules of RBI’s investment policy, the NRIs have a chance to trade in India through the secondary market by just opening a PIS account.
The NRI should also open an NRI account in only one bank.
Once you come back to India again, you just close the PIS account.

Open PPF account before you become NRI

PPF means Public Provident Fund. Once you become an NRI, you cannot open the PPF accounts. If you already have the PPF accounts, you are able to continue the active accounts. If you are interested in continuing the investments, it is possible for you only if you have been operated the account before you become an NRI. You are also able to use the funds available in both NRE as well as NRO and able to make an investment in your PPF account.

Real estate on proper NRI

If you have own residential and commercial properties in India, you can either lease them or give them for rentals after you pay the due taxes.

Usually, the rent amounts are transferred to the NRI owner through the tenants. They always deduct TDS of about 30% amount before transferring. Actually, this income can be transferred from Indian account to NRIs account in the country.
In case, the NRI can sells property and buyer can deduct the amount of 20%. To sell the properties in India, the NRIs have some specific rules and regulations to be followed and also allow them to get exemptions under the section of 54EC and 54.

Apart from this, if you want to know the variations between the NRI and TDS income, you just refer the table given below:

S.No	Income Source	Rate of TDS
1	Bank and fixed deposit: NRO, NRE and FCNR	NRE, 30.9% without DTAA, lower with DTAA
2	Other investments’ interest: Mutual funds, shares and dividends	No TDS
3	Property: gold gains on selling after 3 years	30% on short term gains and 20% on long term gains
4	Debt: mutual funds on selling after 1 year	10% to 20% for long term, short term gains without indexation
5	Capital gains: mutual funds and equity shares gains after 1 year	15% on short term gains and no TDS on long term gains
6	Royalty and professional services	It may varies between 10 to 20% on both long and short term gains
7	Rent	You can get up to 30% of net annual value as maintenance costs and repairs
8	All other incomes	Up to 30%

How the credit card to become an NRI?

When you plan to move abroad, it is better to surrender your credit card to the bank and do not use the Indian credit cards in foreign countries due to overseas expenses. If you not surrender, you just keep it and use when you come back to India. But when you pay the credit card bill, it is only possible via an NRO account and not through NRE account.

In case, when you are using the credit cards at overseas, then following charges are applicable for you that include:

International card withdrawal fee

When you use the credit cards internationally, you will be charged overseas withdrawal fee in addition to cash advance fee. When you are using Indian credit card in foreign ATMs for cash withdrawal, you will charge a cash advance fee of 1 to 2 %. So, you should be aware of using credit cards while you are in abroad.

Foreign transaction fee

Today, the Visa and MasterCard is the widely used and highly recommended payment networks in the world. They can acts as a bridge between the merchant and card issuing bank and allow them to make transaction for buying goods or services. When you use credit cards in abroad ATM, there are two parties can charge a fee such as Visa and MasterCard of around 1% and the card issuing banks of around 2%.

Foreign currency conversion

The currency conversion is also known as cross-currency mark up that completely based on every transaction that you make in abroad using Indian credit cards. For each transaction, it will charge about 3 to 5%. It may vary based on various banks.

Apart from these options, you decide to surrender your credit cards to the bank; first of all you must clear the dues and then surrender your cards. You should also get closing statement from the company.

Steps to make your gas connection on becoming NRI

When you have active gas connection in India and cannot be used for more than 6 months due to move abroad, your gas connection will be closed or deactivated. Before becoming an NRI, there are four possible options available for you to do:

First thing, you can surrender your gas connection and submit everything to the company such as cylinders, pressure regulator to your gas distributor and also get a refund amount of your initial deposit cost.
The second option is reactivating the LPG connection that can be deactivated due to non-usage of more than 6 months. For reactivation, you need to submit an application form to your nearest distributor and also make sure to submit proofs like 2 colored photographs and original ID and address proof.
Third option is to surrender your cylinder to any of your family members. Make sure the transferee should not be in any position of government owned oil or LPG connection companies.
Last but not least option is putting your gas connection in safe custody for a specific period of time to your gas dealer. After you come back, you can resume the connection as soon as possible.

Deactivation of mobile phones before becoming NRI

Basically, if you have an own mobile phone number and don’t use for more than three months, it will be deactivated soon. After 3 or 4 months, the mobile phone company can give that number to any other person. In case, if you already have a post paid number, you must settle down the full payment and submit the form filling application to deactivate your post paid connection. If you not pay a bill properly, the company will send you notice to pay off the bills by contacting from alternate number. If you do not pay still, they will send you the legal notice for your non-payment of the bill.

To overcome the above situations, you make sure if you are not using the same number after becoming an NRI, you can simply surrender your mobile phone in company and request them to activate the international roaming for your current India mobile number. You should also ensure that will you receive the OTP, i.e. One Time Password while transferring funds from your Indian bank accounts.

Regarding income tax return on becoming NRI

If you leave India and play to stay in abroad for a long time, you must file the overall income tax return properly during the economic year up to the end date. Below are the important guidelines for NRI to file income tax return in India discusses here:

Make sure the income should be earned only in India, which is also taxed in India. Such income should be included the following things, dividend income, salary income, interest on bank deposits, rental income from properties in India and capital gains and so on.
There are some variations in tax rates based on the different types of income applicable to NRI, which is as same as the Resident Indians.
Based on the maximum possible taxable rates, the TDS can be deducted by bank of around 30%.
In case, if you fall in very low tax, you will possible to obtain the refunds after filing the income tax returns.

Nominations of various assets

When you are in India, if you have so many assets and you should make sure to have nominations, especially for the entire financial assets. In any unexpected accident may happens, the nominees only possible to get claim of all your assets. So, whatever the assets you may have such as mutual funds, bank accounts, you should nominate a person before becoming an NRI.

Maintain your locker on becoming NRI

When you operate locker in India, it is mandatory to maintain at least once in the six month. Otherwise, the bank has rights to break up your locker if it beyond six months. You should also know, once you become an NRI and you cannot operate your locker in India. So, it is necessary to close the locker or add joint holder with your friends or relatives in the locker before leaving India.

Potential of lawyer on becoming NRI

When you confirm to move abroad, but take care of all your assets and properties in India, the best option is using the power of lawyer. For this, you need to hire a trusted lawyer who is someone in India and responsibility to maintain all your assets, manage your active bank accounts and also often make financial transactions for you. With the help of this attorney, you are able to maintain all your accounts, buying and selling the real estate properties, issuing and transferring cheques, sign your tax forms and so on.

Once you decide to hire an assistant for you, there are two categories of potential lawyers available for you:

A specific POA

The specific potential lawyers have an ability to define a particular scope that includes authority to issue cheques, permit to rent property, etc. Thus, they imply much safety to the NRI.

A general POA

The general power of lawyers are giving rights to the holders to make a vast number of transactions such as real estate and banking transactions.

Make sure to plan your budget properly

When you plan to move foreign and settled in any country, you should always consider the real budge of transferring and living in abroad. Before you become an NRI, you must examine your expenditure that helps you to face and live hassle free in the new places. Before you board a flight, you should also remember to maintain and close the entire necessities. After you reach the new place, you may have to purchase for a big amount of money like household things and many more. Before leaving India, another most important thing to be considered in your mind is saving enough funds and keeps it in your hand ready for the next six to seven months of period for living expenses in abroad.

Overview of financial checklists before becoming an NRI

Basically, an NRI is a person or individual who ready to stays abroad for more than 182 days during the financial year.

In fact, it is quite difficult to find out the residential status in foreign countries but once you get an opportunity to go and you have more responsibility to take care of so many important things. You already know the enough details by reading the detail explanation of becoming an NRI. Below are better and simple ideas for you to plan your residential status in abroad that includes:

Convert your current savings bank account into an NRO account according the rules offered by the RBI. It is mandatory for any individual who stay abroad and must convert their account.
Once you convert to NRO account, it will be quite easy for you get access on deposit the rupee earnings in India such as dividends, rent and interests and so on.
If you convert your account into foreign currency, it will be additional benefits for you because it gives you easy access to deposit funds from abroad. You can also permit for making local payments such as EMIs and other investments via this account.
Before leaving India, it is very important to complete the entire banking process by visiting your nearest branch.
If you left the country without completing the above procedure, you are able to send the necessary documents to the specific bank branch in India.
It is also great to choose the NRE account to gain the benefits of repatriation even without having the Indian income.
Normally, the NRE account is available in three different formats such as savings account, current account and fixed deposit account.
Once you have created account in any of these formats, you will get a chance to transfer the funds that you have earned in foreign country.
The amazing thing about NRE account is completely tax-free and also accepts funds from the NRI accounts.
In fact, the Indians are more savers than money investors. Usually, the NRIs cannot hold the FD but some of the banks can automatically convert your FD to NRO deposits and also update your bank status.
If you have an existing Demat account, you just close it before leaving the country and then open PIS account.
The best choice to take care all your assets is creating a power of attorney before becoming an NRI. This option will help you to transfer or authorize with the help of lawyers who are helpful in managing the financial transactions and other assets in India.
Based on your needs, you can choose either general or specific power of attorney to operate your savings account for buying or selling goods and services, issuing cheques, rent all your properties and sign tax income returns.
After becoming an NRI, you just inform the insurer about your residential status and do not update by yourself, because it is illegal.

Hope, the above discussions of information will definitely helpful for people those who plan to leave India and move abroad to settle and become an NRI. Before you relocate to some other places, you must take care of all those important and legitimate things. It will be definitely a daunting work for all, but it should be done without fail due to avoid hassles in future. Hence, this is what all you know when you move out of India.

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